Traveling the U.S.-Israel High Tech Highway

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Orit Hashay, pictured at the Israel Business Forum during the Third Annual TechCrunch/Disrupt New York Roadshow May 22, founded Brayola, a start-up dedicated to helping women find the perfect bra without the prerequisite of a physical fitting. Photo: Maxine Dovere.

It was standing room only at the Israel Business Forum’s Panel presentation focused on Israeli start-ups held May 22 in the midtown offices of Morgan Stanley, with investors and entrepreneurs gathered to discuss both new product development and methods for the “scaling up” of existing companies.

When Israeli entrepreneurs journey to the U.S., one of the places they are likely to visit is the Israel Business Forum (IBF). At the Third Annual TechCrunch/Disrupt New York Roadshow, held at Pier 92 from May 21-23, some 20 Israeli entrepreneurs exhibiting discussed their projects at IBF’s event.

Since TechCrunch/Disrupt began three years ago, Israeli participation has been coordinated by the U.S. Israel Business Council (USI), which works “for the purposes of designing and implementing investments in, and trade programs between, the United States and Israel.” Roy Carthy, the founder of Initial Capital and TechCrunch’s Israeli correspondent, created the Israeli Pavilion at each of the three “Disrupt” expos. He has assisted companies in the creation and preparation of their presentations. He is not only an observer: Carthy has assisted several of the exhibiting companies as a funder and investor.

Israeli start-ups have had strong showings since Tech Crunch launched in 2010. Three of the five businesses that have won the TechCrunch/Disrupt title have Israeli connections: Soluto, an app for tech-support providers; Shaker, a Facebook app that creates a “virtual, avatar-like world”; and GetAround, a sharing app founded by Israeli Yehonatan Addiri.

The Israeli Pavilion provides visibility for dozens of Israeli companies. At the 2012 conference, two Israeli companies were among the six finalists for the $50,000 “best in show” prize. “Stevie,” founded by husband and wife team Gil Rimon and Yael Givon, a social television platform, and CallApp, founded by Oded Volovitz, Amit On, and Tommy Seinfeld, a linking platform that integrates multiple social platforms.

The IBF gathering provided an opportunity for Israeli entrepreneurs participating in TechCrunch to display their “apps.” Highlighting the meeting was a panel discussion of changes in the start-up financial investment climate. Following the panel’s conclusion, JointMedia News Service spoke with Charles Federman, co-founder of Crossbar Capital and a highly successful entrepreneurial investor in multiple Israeli start-up ventures. Federman emphasized that investors “are seeking a simple business model. While companies can be helped to a certain point, investors are looking for companies able to stand on their own. The challenge is to push the company to do business.”

“We push them,” he stressed.

Asked what he believed investors in large and medium technical companies were seeking, Federman said a 100 million dollar investment “is no different than a 50 million dollar stake. The number of users is what makes a difference—it’s having the audience that makes it (the investment) defensible in the end.” He emphasized that there is more to building a company than revenue creation.

“The downside of concentrating on revenue development is the creation of ‘thin’ companies,” he said. “[Venture capitalists] are looking for mega hits. Companies that focus on revenue don’t focus on scaling and can quickly get left behind.”

Federman believes joint ventures between New York and Tel Aviv, especially the Cornell/Technion union, is “taking the road between Tel Aviv and New York and turning it into a super highway—a bilateral highway with room for movement in both directions.” He predicts that companies will move “from here to there” and go back with an expanded worldview and changed perspective.

“We are building great companies in Israel,” he said.

Federman, a former partner of Nir Barkat, the industrialist-turned-Mayor of Jerusalem, has built seven joint U.S.-Israel companies, among them TRAX and Spark Rebel. Speaking about the robust amount of American and European capital available to Israeli start-ups, he affirmed that approximately 35 percent or more of Israeli start-ups are exclusively funded by non-Israeli financial sources.

“Many [venture capitalists] have set up shop in Israel,” he said. “The money they provide is very different…[likely] to be exclusively financial rather than management based.”

Orit HaShay, developer of Brayola, a start-up dedicated to helping women find the perfect bra without the prerequisite of a physical fitting, was asked by JointMedia News Service if her service would be helpful to women whose specific physicality is the result of trauma or surgery, especially when breasts have been altered because of cancer.

“Such a woman,” said HaShay “needs to know she is not the only one—there are other women who share her situation.”

Brayola, launched March 3, has gotten “great PR” so far, and “everybody’s creating a profile” on the venture’s website, Hashay said.